United States: Economic growth picks up in the first quarter
April 26, 2013
In the first quarter, GDP expanded at a seasonally adjusted annualised rate (saar) of 2.5%, according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 26 April. The print marked a strong improvement relative to the 0.4% growth recorded in the fourth quarter and was slightly below FocusEconomics panellists' expectations of a 2.6% rise. The first quarter acceleration primarily reflected a sharp increase in domestic demand, whereas the external sector deteriorated somewhat.
On the domestic side, the improvement in Q1 was the result of an increase in private consumption, which jumped from a 1.8% annualized expansion in Q4 2012 to a 3.2% rise. On the other hand, government spending dropped 4.1% in the first quarter following a fall of 7.0% in the fourth, with part of the contraction in the first quarter attributable to the spending cuts implemented by the so-called sequester. Nevertheless, the positive reading recorded in Q1 seems to indicate that the economy has not yet been strongly affected by the sequester cuts. Gross fixed investment rose just 4.1% in the first quarter, well down from the 14.0% expansion tallied in the fourth, as a result of lower growth in both non-residential and residential fixed investment.
On the external side of the economy, both exports and imports rebounded over the previous quarter. Exports rose 2.9% in the first quarter (Q4: -2.8% saar), while imports increased 5.4% (Q4: -4.2% saar). That said, the external sector posted no contribution to overall growth, which was worse than the 0.2 percentage-point contribution seen in Q4.
The Federal Reserve expects economic growth to range between 2.0% and 3.0% in 2013 and to accelerate to between 2.6% and 3.0% in 2014. FocusEconomics Consensus Forecast panellists expect GDP to expand 1.9% in 2013, which is unchanged from last month's forecast. For 2014, the panel expects the economy to expand 2.7%.